DIRECTOR NOTES INDIA

Toward a Circular Economy in India

by Anuj Saush and Ashok Prasad

India is one of the fastest-growing economies in the world, and with

500 million people expected to move into the middle- and high-income
bracket by 2030, the demand for commodities and raw material is greater
than ever before.1 Although India has achieved economic growth of
around 7 percent in the last decade, this growth has come with a fair
share of environmental challenges such as water shortages, deteriorating
air quality, and increasing air pollution. India’s raw material consumption
has increased sixfold, from 1.18 billion tonnes (BT) in 1970 to 7 BT in
2015.2 The impending resource scarcity has made resource efficiency
and circular economy a key priority for the Government of India.
This Director Notes intends to introduce the concept of circular
economy and its potential in India. A circular economy is one that
operates within the limits of this planet, and in which resources are
kept in use for as long as possible and products and materials are
recovered and regenerated at the end of their service life.
This report also presents findings of a survey on current circular economy
practices for large Indian companies and provides actionable insights
for companies to embrace the circular economy approach.

1 Anuj Saush, “Do Indian Consumers Really Care about Sustainability?” Director Notes India 3, no. 2,
The Conference Board, November 2019.

2 National Resource Efficiency Policy (draft), Government of India, July 2019.

DN-V4N2  |  MARCH 2020

© 2020 The Conference Board, Inc. All rights reserved.
 Circular Economy: A Brief Background
Perhaps the best way to begin describing a circular economy is by describing what it
intends to replace: the traditional linear economy. A linear economy is characterized
by a “take-make-waste” model, in which raw materials are used to make products that
ultimately are disposed of and wasted. A circular economy, on the other hand, aims
to decouple growth from the use of limited resources. It broadly operates within the
limits of this planet, keeps resources in use for as long as possible, and recovers and
regenerates products and materials at the end of their service life.3 A circular economy
is characterized by three principles: 1.) design out waste and pollution; 2.) keep products
and materials in use; and 3.) regenerate natural systems.4 In other words, it is about
incorporating “repair, remanufacture, and refurbish” principles into the current concept
of “reduce, reuse, and recycle.”

LINEAR ECONOMY CIRCULAR ECONOMY

Energy from finite sources Energy from renewable sources

TAKE > MAKE > DUMP

Technical Biological
WASTE nutrients nutrients

TECHNICAL & BIOLOGICAL

NUTRIENTS MIXED UP LIVING SYSTEMS

Source: Ellen MacArthur Foundation

Companies can introduce circular initiatives in their operations in several ways, including:

• Shift to more sustainable materials (e.g., renewable energy, bio-based

raw materials);

• Reduce material use through design and process efficiency (e.g., light-
weight packaging);

• Increase utilization by sharing (e.g., secondhand market) and/or extend

product life through repair and maintenance;

• Deliver functionality digitally (e.g., books, music); and

• Offer product as a service (e.g., car lease, rental).

3 Thomas Singer, Business Transformation and the Circular Economy: A Candid Look at Risks and Rewards,
The Conference Board, May 2017.

4 What Is the Circular Economy?, Ellen MacArthur Foundation.

2 DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA www.conferenceboard.org

 Circular Economy Opportunities in India
The Indian economy is projected to grow on average by 5.7 percent per annum by
2030.5 With a growing population, increasing middle class, and rapid urbanization, some
estimates suggest a threefold increase in primary raw material demand. A move away
from a take-make-dispose model to a circular model where growth is decoupled from
resource use is fundamental.

The chart below describes future material demand based on different scenarios: business
as usual, slowdown, and fast growth. Irrespective of the scenarios, the material require-
ments are projected to increase. A business as usual approach—medium-growth
scenario—will lead to a demand of nearly 15 BT by 2030 and around 25 BT by 2050.
This means that India would nearly triple its demand for primary materials compared to
2010, particularly the demand for energy, metals, and nonmetal minerals. This increased
demand will put pressure on natural resources such as land, forest, air, and water.

Future Material Demand Projections, India

Billions of tonnes
50

45

40

35

30

25

20

15
Past material consumption
10

0
1980 2009 2015 2020 2025 2030 2035 2040 2045 2050

Slowdown of development process High population growth, stagnation or depletion of resources,

with a GDP growth of 5% p.a.
Current dynamic Medium population growth, new resources and technologies developed,
with a GDP growth of 8% p.a.
Fast catching up Low population growth, new resources and technologies developed,
with a GDP growth of 12% p.a.

Source: IGEP, 2013

5 “Global Economic Outlook 2020,” The Conference Board, January 2020.

www.conferenceboard.org DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA 3

 The circular economy imperative for India goes beyond managing resource scarcity and
the associated price volatility exposure. A study by FICCI and Accenture showed that
embracing the circular economy can help protect around ₹ 32 lakh crore (around USD
500 billion) per annum by 2030.6 A different study by the Ellen MacArthur Foundation
showed that a circular economy path to development could bring India annual benefits
of ₹ 40 lakh crore (USD 624 billion) in 2050 compared with the current development
path—a benefit equivalent to 30 percent of India’s current GDP.7 Both these studies
are based on high-level economic analysis focusing on the agriculture, automotive,
construction, and electronics sectors, which account for two-thirds of the expenditure of
an average Indian household.

A very strong economic and environmental case can be made for transitioning to a
circular economy. Embracing circular economy initiatives will help companies save
material costs, reduce their exposure to price volatility, and work more efficiently. A less
resource-intensive development path will also help alleviate the need to extract virgin
materials and will result in reduced greenhouse gas emissions and water use. It will also
minimize the impact of land-use change on both the environment and the community.

Draft National Resource Efficiency Policy, 2019

The emergence of national regulatory initiatives
to promote the circular economy highlights the
need and the opportunities associated with this
concept. It also highlights the need for companies
to engage with circular economy thinking.
The Government of India has already introduced
several measures to drive sustainable resource
management (e.g., National Manufacturing Policy
(2011) incentivizing green manufacturing to
reduce material, energy, and water use; Science,
Technology and Innovation Policy (2013) to foster
resource-optimized, cost-effective innovations;
Waste Management (2016) to strengthen extended
producer responsibility; and Resource Efficiency
Strategy (2017) setting out a commitment to accel-
erate existing policy priorities to pursue a circular
economy). But most of these interventions were
applied in isolation. However, an attempt to bring
together various policy instruments and frame-
works was made with the introduction of Draft
National Resource Efficiency Policy (NREP) in 2019.
The NREP seeks to create a facilitative and
regulatory environment to mainstream resource
efficiency across all sectors by fostering cross-
sectoral collaborations, development of
policy instruments, action plans, and efficient
implementation and monitoring frameworks.
NREP is guided by the principles of:
• reduction in primary resource consumption to
“sustainable” levels, in keeping with achieving
the Sustainable Development Goals and staying
within the planetary boundaries;
• creation of higher value with less material
through resource-efficient and circular
approaches;
• waste minimization;
• material security; and
• creation of employment opportunities and
business models beneficial to the cause of
environment protection and restoration.

Source: Ministry of Environment, Forest & Climate Change, Government of India

6 Accelerating India’s Circular Economy Shift, FICCI and Accenture, 2018.

7 Circular Economy in India: Rethinking Growth for Long-Term Prosperity, Ellen MacArthur Foundation,
December 5, 2016.

4 DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA www.conferenceboard.org

 Snapshot: How 15 Companies See the Circular Economy
Resource efficiency has been part of the Indian business mindset for a long time. But the
concept of a more encompassing, formalized approach to resource use and management
in the form of a circular economy is relatively new. We undertook a pulse survey in
August 2019 to understand the current practices in relation to the circular economy; 15
companies responded to our online questionnaire. Although this is a very small sample
size, the response provides insights into how companies approach circular economy.

Most of the companies that responded to our survey have embraced circular economy
initiatives in some form or other. Seven of the 15 respondents consider themselves to be
very familiar or familiar with the circular economy concept. More importantly, 11 of the
respondents have implemented a circular economy program, and five have set targets
and made public commitments to circular economy initiatives.

Familiarity with circular economy Adoption of circular economy

How familiar are you with the circular Since when is your organization implementing
economy concept? (N = 15) circular economy initiatives? (N = 15)
5
4 4 4 4 4
3
2

Not Slightly Familiar Very Not as yet 2018– 2016– Prior to

familiar famiiliar familiar present 2017 2016

Source: The Conference Board

The survey also explored the motivation for pursuing circular economy projects.
Respondents cite cost reduction as the most common reason to initiate circular economy
projects. Other drivers include seeking competitive advantage, customer demand,
and risk reduction.

Drivers for circular economy

What are the main reasons for initiating the circular economy projects?
(multiple selections possible)

4
3 3 3
2 2

Cost Competitive Customer Risk Business Other –

reduction advantage demand reduction opportunity responsible
corporate
behavior
Source: The Conference Board

www.conferenceboard.org DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA 5

 The survey also asked respondents to specify the stages of the value chain where they
consider circular economy initiatives. Given the emphasis on waste management and
extended producer responsibility, it is not surprising that most companies cited end
of life takeback and recycling and packaging initiatives as the areas where they have
considered circular economy initiatives. Respondents also said that they primarily start
applying circular economy innovation—development and introduction of new or signifi-
cantly improved goods or services—at a product level.

The respondents were also asked to specify the role different stakeholders—top
management, sustainability/environment team, and business unit—undertake in imple-
menting circular economy initiatives. The responses indicate that the sustainability/
environment team is extensively involved in identifying and implementing circular
economy initiatives, with limited engagement by top management. This finding suggests
top management may not deem the circular economy to be sufficiently strategic.

CASE EXAMPLES

Coca-Cola, India
The “Fruit Circular Economy” initiative is aimed at increasing farm productivity through
innovation and technology. This will help farmers to meet the local as well as export
demand and supply the surplus fruit to Coca-Cola to produce juices.

Tata Steel
Tata Steel has been working to reuse the by-products generated during steel production.
For example, it has achieved 100 percent slag use across its operations, and its products
such as Tata Nirman and Aggreto are now used in road construction, fly ash brick, and
clinker making. It has also opened plants to process scrap steel to keep the material in
circulation for downstream steel products.

From a practitioner perspective, the reasons to pursue circular economy initiatives are clear.
Eight of the 12 respondents said that their circular economy initiatives have led to cost
savings and contributed to additional profits.

Circular Economy Benefits

What is the overall effect of the circular economy
initiatives on your organization’s bottom-line? (N = 12)

68%

16% 16%

Adds to profit Breaks even Don’t know

Source: The Conference Board

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 CIRCULAR SOCIAL INNOVATION
India is seeing a rise in “circular social innovation”—an approach where social
enterprises enable sustainable development through the adoption of innovative,
regenerative activities and services. The primary goal is broader social and
environmental well-being rather than individual or company profits.
Goonj, which means “echo,” takes discarded and underused materials like clothes,
furniture, household appliances, and school materials from larger Indian cities and
uses them to address basic needs among the rural poor. Under its flagship initiative
called Cloth for Work, Goonj puts more than 3,000 tons of materials to use, initiating
and implementing more than 2,000 developmental projects each year. These projects
create long-term impact in areas such as improving sanitation and health, building
infrastructure, and facilitating income-generating activities among marginalized people.
Other organizations using circular social innovation include Husk Power Systems, which
generates electricity from rice husk waste; Ecofemme, which produces reusable cloth
sanitary pads; and Karma Recycling, which collects, repairs, and resells used mobile phones.

Realizing India’s Circular Economy Potential

Companies do not operate in isolation but are interconnected with society and
government. The benefits of adopting sustainable practices including circular economy
initiatives are clear. It is likely that the government will turn to the business community to
address excessive resource consumption. Regulations concerned with resource efficiency,
producer responsibility, and eco-efficiency will markedly expand. Companies need to
proactively consider the opportunities these will bring and move away from a compliance
mindset to fully realize the circular economy potential.

A transition to a circular economy will require making products, processes, and services
more sustainable. This requires changes to how we design, produce, use, reuse, repair,
and recycle products. This implies improving industrial processes. It will require new
circular business models. Digitalization can make a significant contribution to all these
components of circular economy.8

8 Annika Hedberg and Stefan Šipka, “Digitalization: An Enabler for a Circular Economy,” Sustainability Matters 3,
no. 1, The Conference Board, January 2020.

www.conferenceboard.org DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA 7

 MAKING PRODUCTS, PROCESSES, AND SERVICES MORE CIRCULAR
Improve design Designing products and materials that are more sustainable,
durable, reusable, and easily disassembled, upgraded, and/or recycled is central
to creating a circular economy. Much work remains to be done, but innovative
approaches like using artificial intelligence (AI) in design processes are promising.9
AI can be used to improve the processes, as it allows designers to play with numerous
materials and structures and test and refine design suggestions.

Improve production and processes The production of materials, components, and

final products can be energy and resource intensive and lead to significant waste.
Digital tools can optimize processes by preventing waste and emissions and reducing
energy and resource consumption. They can be used to facilitate industrial symbiosis
and exchange of materials between businesses. New technologies like 3D printing
can also boost the development of local solutions by helping local manufacturers
produce and deliver products and services to customers on demand.

Improve reuse, repair, disassembly, and durability of products Extending the life
cycles of products like electronic appliances through repair, remanufacturing, and
reuse is central to a circular economy, and several new and emerging digitally enabled
solutions already contribute to these efforts. Online platforms can be used as a
source of information and to connect stakeholders. Data exchange could enable the
identification and safe recovery of equipment that can be remanufactured and prevent
it from being recycled, dismantled, or repurposed for a lower-value function. Durability
can be enhanced and repair facilitated via connected machines that provide real-time
information on the condition, state, and availability of products. When data are used
to identify problems with the functioning of products, thus contributing to predictive
maintenance, cheaper and more efficient repairs become possible.

Enable service-based models Business models are increasingly shifting from

producing goods to delivering services, and digitalization plays a major role in this
development. An example of a service-based business model that has a strong circular
component is “products as a service,” where suppliers own products and customers
pay to use them. Servitization often benefits from digital solutions: customers access
information about the availability of a product, while suppliers can continuously monitor
product performance and take timely, predictive maintenance measures.

Lastly, eco-friendliness resonates with consumers and can be a gateway for brands to
speak to customers interested in sustainability. Companies can use their circular economy
initiatives to build brand equity by creating emotional connections and making consumers
feel good about embracing sustainable brands.10

Accelerating India’s Circular Economy Shift, a report by FICCI and Accenture, provides
detailed insights into application of circular economy in specific sectors—automobiles,
fast-moving consumer goods, and metals.

9 See, for example: Artificial Intelligence and the Circular Economy, Ellen MacArthur Foundation, January 23, 2019.

10 Saush, “Do Indian Consumers Really Care about Sustainability?”

8 DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA www.conferenceboard.org

 Making a start
While the approach and specifics vary by industry and region, the principles for companies
to embrace circular economy are consistent.

1 Adopt an integrated approach. Articulate the business benefits of the circular

economy—the key is to understand how circular economy initiatives can help
in realizing the company’s strategic objectives. This will reinforce the case for
a circular economy.
2 Promote cross-functional shared accountability. Treat sustainability—circular
economy—as an enterprise-wide responsibility. Various function heads (e.g.,
strategy, finance, operations, product design and development) need to have a
clear understanding of the value add from circular economy initiatives as this will
help them to support and share objectives. Strong active support from board-
level executives can help facilitate this transition.
3 Build alliances and partnerships with external parties. Collaborative partner-
ships with external organizations—industry associations, nongovernmental
organizations, etc.—can play a key role in catalyzing transition to a circular
economy. Form coalitions of the willing and find partners that want to build on
the first-mover advantage.
4 Tap into the collective experience of your suppliers. Suppliers are specialists in
their respective fields, and tapping into their skills and knowledge in effect offers
additional research & development capacity.
5 Harness digital technology’s potential. Develop a systematic approach to
improving workers’ digital literacy and digital skills. Workers need to become
more accustomed to digital technology as this can help them explore the potential
application. Companies can start by piloting small projects to assess the potential
benefits and resource requirements.

www.conferenceboard.org DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA 9

 Respondent profile
(number of companies)

Annual turnover* Employees Industry

Less than 1,000 (1) Less than 1,000 (3) Retail (4)

Between 1,000–5,000 (7) Between 1,000–5,000 (4) Manufacturing, including engineering (4)

Between 5,000–0,000 (4) Between 5,000–10,000 (4) Retail (3)

More than 10,000 (2) More than 10,000 (4) Business services (2)

Others (2)

* In ₹ , crores
Source: The Conference Board

Related Resources from The Conference Board

Digitalization: An Enabler for a Circular Economy
Today, more and more businesses across most industries are looking to pioneer digital
solutions to create value, and to improve their processes, products and services. This
transition is happening against the backdrop of a climate crisis and depletion of natural
resources as well as increasing global competition, which cast a shadow on businesses’
prospects. Increasingly, companies are facing pressure to adjust and respond to these
trends—and in these efforts, they could benefit greatly by building on the possibilities of
digitalization offers. This report explores the role of data and digitally enabled solutions in
accelerating the transition to a more sustainable, circular economy.

Business Transformation and the Circular Economy

Natural resource constraints and global environmental risks are challenging the traditional
linear economy—where companies “take, make, dispose.” Companies are facing pressure
to adjust to a new circular economy—one in which resources are kept in use for as long as
possible, and products and materials are recovered and regenerated at the end of their
service life. This report examines how companies can successfully transform their business
models, capture value, and minimize risk in a circular economy.

10 DIRECTOR NOTES INDIA  TOWARD A CIRCULAR ECONOMY IN INDIA www.conferenceboard.org

ABOUT THE AUTHORS The Conference Board is a member-focused think tank
that provides trusted insights for what’s ahead. We are
Anuj Saush leads the sustainability research practice for
a non‑partisan, not-for-profit entity holding 501 (c) (3)
The Conference Board Sustainability Center in Europe. He
tax‑exempt status in the United States.
started his career as an environmental consultant, focusing
on strategy, innovation, and compliance, and then transi- www.conferenceboard.org
tioned into corporate sustainability roles, where he has the
experience of leading and delivering sustainability strategy,
Russell Reynolds Associates is a global search and leadership
climate change, supply chain, circular economy, and social
advisory firm. Our 425+ consultants in 46 offices work
enterprise programs. Anuj’s previous roles include positions
with public, private, and nonprofit organizations across all
at the international professional services firm, PwC and
industries and regions. We help our clients build teams of
with the low-carbon energy group, EDF. Anuj has a master’s
transformational leaders who can meet today’s challenges
degree in environmental policy from the London School of
and anticipate the digital, economic and political trends that
Economics and holds a civil engineering degree from North
are reshaping the global business environment. From helping
Maharashtra University in India. He also attended the sustain-
boards with their structure, culture, and effectiveness to
ability leadership program at the University of Cambridge. He
identifying, assessing, and defining the best leadership for
is a Chartered Environmentalist and a member of the Institute
organizations—our teams bring their decades of expertise to
of Environmental Management and Assessment. He is also a
help clients solve their most complex leadership issues.
trained coach and is currently pursuing an executive program
in behavioral psychology at the Henley Business School. SERVICES
Ashok Prasad received his MBA from FMS, University of Board & CEO Advisory Services Executive Search
Delhi and has completed a master’s program in sustainability Diversity and Inclusion Family Business Leadership
from Harvard University with Honours (Dean’s List). He Assessment
Digital Transformation
serves as a visiting faculty at Xavier Institute of Management
Culture Assessment Succession Planning
& Entrepreneurship and Symbiosis Institute of Business
Management, Bangalore. His areas of expertise are CSR, www.russellreynolds.com
corporate sustainability strategy, cause marketing, and social
entrepreneurship. He embarked on a “second career” in
academics, research, and writing in 2015, after extensive
experience as a profit centre head with leading multinational
organisations in India and as a divisional head with an
automotive group in the Middle-East. He contributed a chapter
on circular social innovation to the book Social Enterprises &
Sustainable Business Models, published by Palgrave Macmillan,
London, and his articles have been published by Economic
Times, The Guardian (London), Cause Marketing Forum (USA),
and Stanford Social Innovation Review.

THE CONFERENCE BOARD is the member-driven think tank that delivers trusted insights for what’s ahead. Founded
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